Thursday, October 9, 2014

As I was writing the previous three posts outlining what is known about the Honduran side of the drug trade, the Guatemalan newspaper, El Periodico, was reporting on the Guatemalan connections of the Valle Valle family. The central focus in Guatemala is on José Manuel Lopez Morales, alias El Ché, a drug trafficker identified by the US Drug Enforcement Agency (DEA) as the main Valle Valle connection in Guatemala.

On September 27, 2014, Guatemalan security forces and the DEA raided a variety of homes and businesses in Chiquimula, Guatemala, looking for José Manuel Lopez Morales. Lopez Morales, they contend, is linked to a number of other known drug traffickers and transportistas believed to control the drug trade from along the Honduran border into Guatemala, Belize, and El Salvador. The raids failed to capture Lopez Morales, although they did capture both his wife, Deidy Gisleny Nufio Franco, and one of his bodyguards.

Lopez Morales is the nephew of the mayor of Chiquimula, Mario Rolando Lemus Martinez, whom the DEA has identified as being in charge of the logistics of the drug trade in the region. Lopez Morales is also alleged by the DEA to be the godson of an unnamed town official in San Jose La Arada, near Chiquimula. In addition, Lopez Morales has benefited from the political support of the Mayor of Concepcion, Las Minas, Juan Banegas. In the communities around Chiqiumula, El Periodico reports that Lopez Morales is said to be helpful in funding social projects, and this includes having the arena in San Jose Ermita named after him. Further, Lopez Morales was connected with the owner of a bus line that runs from the Honduran border crossing near Ocotepeque, Honduras, to Quezaltepeque, Guatemala. That bus line is said to have hidden caches in the buses where drugs are smuggled within Guatemala.

Without looking at a map, its not immediately evident that these towns named above are all strategically located for the transhipment of drugs from Honduras into Guatemala and El Salvador. San Jose Ermita is located along the road between Copan Ruinas, in Honduras, and Chiquimula. San Jose La Arada is located along the route from Chiquimula to El Salvador, passing through the Ipala region. Concepcion Las Minas is near Esquipulas, on the border of a large forest preserve along a highway that leads into El Salvador. Quezaltepeque is located along the road that runs from Ocotepeque, Honduras, further into Guatemala, or over into El Salvador.

El Periodico reported that some in Guatemala believe the Valle
Valle family articulated with the Cartel de Ipala, who run the drug
trade in Guatemala's Jutiapa Department, along the Salvadoran border,
but the Guatemalan Interior Minister, Mauricio López Bonilla, in a
recent statement to the press indicated that Lopez Morales was the Valle
Valle family's contact in Guatemala.

Lopez Morales reportedly escaped the DEA raid by hiding in one of 10 ambulances seen cruising the roads around Chiquimula all day with their sirens on; an unusual sight. Because they had their sirens on, they were not detained by the police roadblocks, and Lopez Morales escaped. He's said to have gone to the owner of the bus company mentioned above to have himself smuggled into Honduras.

While what El Periodico reports is sketchy, what they seem to be reporting is a Guatemalan crime family with ties to one or more transportista families. The article briefly mentions cartels in adjacent parts of Guatemala. The Ipala cartel tranships drugs from El Salvador into Mexico's Pacific Coast, and moves some drugs from Guatemala into El Salvador. The Rodriguez cartel, mentioned as controlling the drug trade around Bodegas and Zacapa, moves drugs into Belize and the Guatemalan Peten.

What's beginning to emerge in both Guatemala and Honduras is an image of a number of small, territorial families linked to moving drugs from specific counterparts further along the path to the United States. As drug interdiction succeeds in Honduras, there will be smaller and smaller amounts to move, leading to competition and consolidation of these crime families. This particular network works for the Cartel del Pacifico (formerly the Sinaloa Cartel).

Honduran security forces arrested Héctor Emilio Fernández Rosa, wanted for extradition to the United States on drug charges. Fernández Rosa, a Honduran born in La Entrada, Copan, has been linked to the Zetas by the DEA. He is alleged to operate as a transportista along the Honduran Guatemalan border, moving drugs from Playitas, Florida, Copan to the Peten in Guatemala. Members of the Tropa de Inteligencia y Grupos de Respuesta Especial (TIGRES), along with the DEA, suprised Fernández Rosa in his home in El Hatillo, north of Tegucigalpa.

According to the Prensa Libre of Guatemala in 2012, Fernández Rosa was linked to various actors in the Zeta network in Guatemala, including Otto Herrera (extradited to the US), Jorge Paredes (captured in Honduras in 2008 and wanted in the US), Waldemar Lorenzana (patriarch of the Lorenzana crime family in Guatemala in charge of moving the Zeta's drugs from Honduras into Mexico), Elio Lorenzana (being extradited to US from Guatemala), Brian Linares (a member of Otto Herrera's group), and Mario Ponce (captured in Honduras and extradited to the US).

This is a lucrative business. The DEA was able to reconstruct over 552 financial transactions, over $10 million, between 2007 and 2010 for Mario Ponce alone.

Because of all of the above captures, the Guatemalan side of the business has been in a constant state of flux, reorganizing as each person was captured. Investigations last year in Guatemala determined that Jorge Ponce Rodriguez, brother of Mario Ponce, is currently in charge of this crime family and has recruited six others. Hector Emilio Fernández Rosa is his Honduran contact moving drugs through blind border crossings between the Department of Cortes in Honduras, and the Department of Izabal in Guatemala, and from there into the Peten in Guatemala.

Jorge Ponce Rodriguez in turn, is working with Horst Walter Overdick Mejia around Lake Peten Itza and Coban, Verapaz, to move the drugs closer to Mexico. Overdick Mejia has been receiving weapons and training from the Zetas since 2008. Ponce uses aircraft to move drugs within Guatemala, and has several pilots known to be working for him. It appears that at least some part of his organization also moves drugs into Spain, where he owns several companies.

Its worth pointing out that Jorge Ponce Rodriguez is credited with being the drug cartel running the territory adjacent to José Manuel Lopez Morales discussed in a previous post. Together these two control the entire Guatemalan side of the Honduran-Guatemalan border region, a region with at least 45 known blind crossings.

Wednesday, October 8, 2014

In the first two installements of this series, we discussed examples of what a September 2012 UN report called a territorially-based crime group and a transportista crime group in Honduras.

The third kind of group involved in the international drug trade are what the UN calls tumbadores, disruptive groups that prey on crime families and transportistas opportunistically, to take their drug shipments and sell them to others.

Tumbadores
often form from territorial groups, like crime families. In addition
to hijacking shipments of drugs, they may also extort the transportistas who must cross their territory to move drugs along, and they may contribute to street crime.

In Honduras, Los Grillos, a group operating near La Ceiba, have been identified as tumbadores. They've been competing
for territory with Los Pelones, also headquartered in La Ceiba. That
conflict generated over 373 firearm caused homicides in the first half
of 2011 in La Ceiba.

Both groups are said to operate by trying to hijack drug
shipments traveling from eastern Honduras through the La Ceiba area. They have reportedly
heavily infiltrated the police in La Ceiba, and carried out contract
killings on reporters in the La Ceiba region, including reporter David
Meza Montesinos, who was broadcasting exposés on police corruption in La
Ceiba when murdered.

More recently Los Grillos have expanded into the Bay Islands of Honduras, particularly Roatan where they're following the drug traffic in coastal waters.

Not included in these three main categories are street gangs, the Maras. The UN report concludes that they "have little connection to the transnational drug trade, and focus primarily on extortion and other local power struggles". This goes against a powerful representation popular with the Honduran (and some international) media that links the street gangs and drug traffickers together.

The Mara Salvatrucha (MS-13) and the Mara Calle
18 are territorial organized crime units. but are not
usually classified as organized crime units because their focus is not
financial gain. They provide small amounts of security and distribute
money to friends and family, but make no pretense of serving a broader
public good as do the crime families.

Their territorial control is about identity, respect and
their place in the world, according to the UN report. This focus on identity causes
them at times to work against their financial interests, feuding with others over
symbolic incursions.

They
are trans-national, but not organized trans-nationally. They are present across the United States, Mexico, Honduras,
Guatemala, and El Salvador, but there is no central leadership that
coordinates what each member organization is doing. Both gangs operate as small territorial units, cliques, that control or dispute a small local territory. Some analysts suggest there is a national structure
made up of the leadership of the largest cliques. Both may have cliques
that make opportunistic alliances across international boundaries but
outside of this, there is no international coordination of activities.

While neither
Mara is a major player in the international drug trade, both are involved in local distribution of drugs in Honduras. That doesn't mean they are benign; their
primary activities are major sources of violence in
Honduras: kidnap for ransom, extortion from transportation (bus,
taxi), extortion of local businesses and individuals, murder for hire, and theft accompany their involvement in street trafficking of drugs within the country.

Their street level drug
trafficking is mostly cannabis, with only a little cocaine these days.
Back when they arrived in Central America, they got their start by
trafficking crack cocaine, previously not a problem in Central America. But today, the cocaine trade is international business of the cartels.

In Honduras, the way the Maras have articulated with the territorial crime families and transportistas
is through murder for hire. In the Bajo Aguan, there's evidence that a
group calling itself Mara 61 has been hired by drug traffickers to
provide security and logistical support for their operations. Mara
Calle 18 was hired by the Zetas to carry out contract killings in
Honduras.

It
is the activities of the Maras in extortion and
murder for hire that produce the most violence in Central America.

In
El Salvador, when politicians and the Catholic church negotiated a
truce between MS-13 and Calle 18, it dramatically
lowered homicide rates, while extortion and other gang related crimes
continued unchecked. When the truce collapsed, homicide rates returned
to their former, high, levels.

The UN report shows that violence in Honduras
is a result of two primary forces, conflict between the various people
involved in the drug trade, and the high level of violence promulgated
by the Maras.

Collapsing these two sources of violence is a mistake that can lead to thinking strategies intended to fight the Maras are also countering drug trafficking, or that fighting drug trafficking will reduce the high levels of violence people endure in some Honduran cities. These are separate problems, even if each offers opportunities for the other.

Tuesday, October 7, 2014

Honduras failed to come to an agreement with the International Monetary Fund (IMF) for stand-by funding of the Honduran government over the next three years last week. Negotiations have now entered overtime with a deadline of today, October 7. Without an agreement and a dramatic reduction in deficit spending, the Honduran government of Juan Orlando Hernandez will have trouble making payments on the existing debt accumulated by the unrestrained deficit spending of the defacto government of Micheletti Bain and his successor Porfirio Lobo Sosa.

Marlon Tabora, President of the Central Bank, has been leading the negotiations with the IMF in Washington, DC since the beginning of last week. He has met with high level officials within the IMF including Alejandro Werner, Director of the Western Hemisphere Department.

There are two real sticking points in the negotiations. First, the IMF is requiring Honduras to divest itself of the state owned electric company (Empresa Nacional de Energia Electrica) and to programatically reduce the deficit spending from its current 5.2% of Honduras's Gross National Product to 1.7% by 2017. Given the National Party's propensity to overspend on security (military, new police forces like the TIGRES, FUSINA, etc) and gutting of social welfare programs, this reduction would leave it with little to nothing to spend on development, infrastructure, or economic stimulation, all areas which need more investment by the government.

While the conversations were extended two days into this week, Tabora has until this Friday, October 10, to negotiate a letter of intent with the IMF. Without a signed letter of intent by the end of this week, Tabora will not be able to present to the full IMF at its November 10 Directors meeting for final approval. Such an agreement was expected to provide between $190 and $200 million to meet this year's deficit. Without it, the government will have to sell bonds in the internal and external financial markets at substantial interest in order to pay for its current spending.

In the first installement of this series, we illustrated what a September 2012 UN report called a territorially-based crime group in Central America, with a discussion of the recently arrested Valle Valle family.

The second kind of criminal group identified by the UN are the transnational trafficking networks, or transportistas. Transportistas work
like a legitimately subcontracted transportation company. Their
relationship to suppliers is contractual, but they are free to work with
anyone. They move drugs between point A and point B where A and B are
frequently under the control of territorial crime families.

They don't
seek violence, and indeed seek to remain unnoticed.

The Chepe Handal organization was described as a transportista
organization when it was dismantled. Chepe Handal allegedly moved drugs for the Cartel del
Pacifico from the departments of Colon, Atlantida, and Cortes, to the
border region with Guatemala.

While the organized crime family where the
Chepe Handal organization picked up the drugs remains publicly
unidentified, the newly arrested Valle Valle family control the area where the Handal organization allegedly brought drugs to smuggle across the
Honduras/Guatemala border.

Transportistas need
to be crime families with established ties into
politics and participating in the corruption of government officials,
and Handal's organization fits that description. It was large and
diversified. It owned hotels, a zoo, construction companies, retail
stores in San Pedro Sula, and transportation companies. Chepe Handal also bred
thoroughbred horses.

While many
of the Honduran border area crime families go unidentified,
across the border in Guatemala territory is said to be under the control of the
Mendoza crime family. They have extensive land holdings along the whole
border in ranches and agricultural production. They also own hotels,
gas stations, construction companies, and transportation companies, and
move cocaine from the border region into the Peten. That makes them an example of a transportista group.

But they simultaneously fit the description of a territorial group: they are now allied
with the Lorenzana family of Guatemala, that controls the border
territory of Zacapa in Guatemala. Together they control much of the
Honduras/Guatemala border, from the Caribbean inland to Ocotepeque in
far southwest Honduras.

Another Honduran example
of an alleged organized crime family would be the Arnaldo Urbina Soto
family, arrested in July. The head of the family is the alcalde (mayor) of Yoro. One of his daughters, also
arrested, was the head of the Honduran Congressional committee on children.

The Urbina Soto family is alleged to have participated in drug
trafficking, 137 murders, car theft, building landing strips for drug
planes, and the forced displacement of people. They owned large cattle
ranches in Yoro, many houses described as "mansions", and ran an aviary that
included ostriches.

While 137 murders might seem like a lot,
in the context of some parts of Honduras, that's just a month's worth of
homicides. Crime organizations need to keep their profile fairly low in
order to succeed. Murders need to be strategic and uninvestigated.

The Urbina Soto family most likely worked for the Zetas, who US sources say are headquartered in Santa Rita, Yoro. Their drugs are transported through the western Honduran Department of Santa Barbara and points south, reaching the Guatemalan border near Ocotepeque, with a handoff to the
Lorenzana family in Guatemala.

Diana Patricia Urbina Soto, a National Party Congressperson from Yoro when arrested, was later released. Her political visibility produced an unusual piece of information: she answered the question posed to congress members "Are you in favor of, or against the legalization of
drugs?" by saying "In favor, in this way it will reduce the violence and
control the consumption".

Given the UN analysis, that might well be how a member of one of these crime families views things. Drug trafficking is a business; they provide security and governance to otherwise ungoverned territories. Violence is not their main goal; when it happens, it is a side effect of cartel struggles or is specially targeted.

Monday, October 6, 2014

On August
20th of this year the Valle Valle family of western Honduras was named
by the Treasury Department's Office of Foreign Assets Control as "significant drug traffickers" under the Kingpin
Act. This weekend, members of the family were captured in Honduras.

In the August statement, the US named Miguel Arnulfo
Valle Valle and his brothers Luis Alonso and Jose Reynerio Valle Valle.
Not included was their youngest brother, Jose Inocente Valle Valle.

A UN report from September 2012 on the drug trade in Central America provides a context for understanding these developments. The UN identified three groups of actors in Honduras that are at least tangentially involved in the drug trade, and how each of these groups relates to violence.

First are the territorially based organized crime groups. These impose order where the state government lacks control, offering security and protection in both city neighborhoods and the countryside. They require an enforcement organization, and there must be a clear chain of command, often family based:

These territory-bound groups are intensely concerned with
local affairs, and this limits the scope of what they can do.
They can demand tribute (extortion), give credit at usurious rates (loan sharking), and dictate local employment
conditions (labour racketeering) within their zones of influence. With their money and community standing, they can
even affect voting outcomes and wield considerable political clout. They may move into high-level corruption, such
as public procurement fraud. Once secure in their status as
political patrons, they can engage in acquisitive crime at
will, selling stolen property and smuggled goods with
impunity.

The UN report goes on to say these groups often have to fight with rival outfits for control of contested territory, and this means they spend an "undue amount of time addressing symbolic infractions, sending messages to their constituencies about who is in control."

What this means is that they control the wholesale traffic through their region, and this often can include drugs as one of the sorts of contraband that flow this way. They then subcontract risk, such as local distribution, to others. In Central America, because of these groups' geographic control, international drug trafficking is under their command.

These crime families are not interested in stirring up violence as part of their drug trafficking. Traffickers generally are interested in keeping the violence down and not drawing attention to themselves. Thus they operate in remote areas with little state control.

The Valle Valle family fits this part of the UN model.

The US government alleges the Valle Valle family runs a business that moves thousands of kilograms of cocaine each month towards the United States, laundering the money generated through three coffee-producing companies (Inversiones Yosary, Inversiones Luisito, and Inversiones Valle), a cattle and dairy business (Finca Los Tres Reyes), and a hotel in La Entrada, Copan.

According to the US, the Valle family operates a drug business in the Honduran Department of Copan, in the municipality of Florida, Copan, along the Honduras/Guatemala border. Here there are several legitimate border crossings, and other blind crossings between Honduras and Guatemala. Florida is adjacent to the town of El Paraiso, Copan, where the Alex cartel, linked to the Sinaloa cartel, operates.

Once the Valle Valle brothers and their businesses were designated as "significant drug traffickers" by OFAC, the Honduran government in association with the US Drug Enforcement Agency confiscated their businesses, houses, bank accounts, hotels, and in the process located arms caches buried on one of their properties. However, the family had been tipped off, and their houses had been largely emptied of all possessions, just as other such operations have been leaked to the families about to be pounced on by the Honduran police and the DEA.

On October 3, Honduran security forces captured Jose Inocente Valle Valle in El Porvenir, Florida, Copan, about 30 minutes drive from the Guatemalan border, and confiscated a gold plated AK-47, many pistols of different calibers and over 600 rounds of ammunition. Also confiscated was a picture of Jose Inocente with his arm around the former head of the Transit Police in Copan, Neptaly Aguilar Rivera. Among his other possessions when captured was a belt containing 12 solid gold coins stamped "Sinaloa".

Sunday, the Honduran police captured two more brothers (Miguel Arnulfo and Luis Alonso) in El Espiritu, Copan, only a five minute drive from the Guatemalan border.

The Valle Valle family was allegedly responsible for
getting drugs from Honduras across the border to the right people in
Guatemala, making up what the UN called a territorially based organized crime group. There others took over-- something we cover in the next installment of this series.